The WSJ report cites EU officials familiar with the matter on the development, which they hope will "thaw the frozen region's frozen wholesale lending market."

It seems unlikely that guarantees by struggling sovereigns would quell investor fears sufficiently to buy long-term bank debt in troubled countries, particularly since the guarantees provided by national banks would inherently be risky.

However a plan that would have created a euro wide "syndicate" to equalize the price of bank guarantees faced steep opposition from AAA-rated countries, and would have taken longer to form.